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Brexit Reflections - How could Scotland remain in the EU?

In this extended blog, Prof Michael Keating considers Scotland's options for remaining in the EU - economically, politically or both.

In 2014 Scotland voted by 55 per cent to stay in the United Kingdom. Now it has voted by a larger margin (62 per cent) to stay in the European Union. It cannot, it seems, remain in both and must choose. Scottish politicians, however, have not rushed to demand independence in Europe but are taking time to work through the options.

There are two meanings of being in the EU at play here, as there are for the UK as a whole; being part of the political union with full rights of membership; and being part of the economic union, the ‘single market’. Some Brexiters seem to want to stay in the economic union without the political one. This is a difficult position, since it is the political institutions that shape the rules for the economic one but it is sometimes useful to consider them separately. There is now a search for some way in which Scotland, without going for independence right away, could somehow stay within the EU (that is either the economic or the political union).

One way would be to stop Brexit happening. The legislation to take the UK out of the EU would on first sight require the consent of the Scottish Parliament. This is because it would impinge on devolved matters such as agriculture, fisheries and other matters, where Westminster has no remit, so requiring a legislative consent motion under the Sewel convention. The convention has also extended to changing the competences of the Parliament itself, which Brexit would do by removing the obligation of devolved laws to conform with those of the European Union. On the other hand, relations with the European Union are a reserved matter and the Sewel convention, as incorporated into the Scotland Act (2016) includes the word ‘normally’, allowing the UK Government to argue that Brexit is not a normal matter. There seems little doubt that Westminster would prevail, albeit at the cost of a confrontation with Holyrood and a constitutional crisis to add onto that already created by Brexit.

There is talk of a ‘Greenland in reverse’. Greenland has domestic home rule within Denmark, as Scotland does within the UK, but in 1979 withdrew from the European Union (as it is now known). The Faroe Islands, also part of Denmark, never went into the Union to begin with. These do not provide precedents for Scotland. They are small parts of a state, the larger part of which is in the EU and therefore able to play a full role in European matters and even look after the interests of the islands where necessary. In the case of Scotland, there would be no member state as a reference point and the larger part of the state would be outside the EU. Greenland and Faroe, in any case, comprise small Atlantic islands in which it is easy to see who and what is coming and going and whose economies make almost no difference to the EU as a whole.

Another possibility arises from the fact that, after Brexit, many of the competences currently at European level will revert, not to Westminster but to Holyrood. These include agriculture and fisheries, environment policy and areas of higher education including university fees and research. It might be that the Scottish Government would continue to look to Brussels rather than London for policy leadership in these matters and seek to align its policies with those in Europe. It could continue to cultivate partnerships with regions and cities in Europe and engage in cooperation with them. None of this, however, would touch on the big issues of the single market, trade and free movement of people, nor would they give Scotland a role in EU policy making. For most purposes, Scotland would be outside both economic and political unions.

The clearest way of remaining fully in the EU would be for Scotland to become independent, after another independence referendum. Brexit provides a justification for this, as it was made clear at the time of the 2014 independence referendum that No meant remaining in a United Kingdom within the EU. Indeed, the No side made great play of the risk that Scotland, outwith the UK, would be outside the EU as well and that only staying in the British union could keep them within the European one. What is common to both cases is that European leaders would struggle to find a democratic justification for excluding a democratic country meeting the accession criteria.

Yet the path would not be easy. Westminster’s consent would still be required for an independence referendum. There are some political forces in England, English-nationalist in their thinking, who are relaxed about Scottish independence and could even welcome it, but there is still a unionist majority at Westminster. Whatever the moral arguments, other EU states would not necessarily welcome Scottish secession from the UK. The acting Spanish prime minister, with Catalonia in mind, has already declared that if the UK leaves the EU, Scotland leaves. Neither EU institutions nor other member states would want to get the issue of Scotland mixed up with Brexit negotiations or be seen to be helping the break-up of a European state. This makes seamless transition to independence with simultaneous EU membership very difficult.

It would be easier if Scottish independence came first, before the UK actually left the EU. Then Scotland could apply to join the EU. Contrary to what was said last time by some people, this would not involve joining a queue. There is no queue for EU membership and new member states come in as they are ready. Scotland might hope for a fast-track admission in view of the fact that it meets the entry criteria. While a seamless transition would be difficult, arrangements could then be put in place so that Scotland remained within the scope of European law and policies while accession was negotiated. In rather different circumstances, transitional arrangements have been made for other new member states. It may be, as some have suggested, that in the transitional period Scotland could be in a special arrangement like that of Norway, which is within the single market and bound by most European policies but not in the EU itself.

With Scotland in the EU and the rest of the UK outside, however, there would be a hard border between Scotland and England. Access to the UK market for Scottish goods and services and Scottish workers would be hampered. Since the UK market is much more important than the rest of Europe to Scottish business, this might not look like a good bargain. After it joined the EEC (now EU) along with the UK in 1973, Ireland did diversify its trade and reduce its dependence on the UK market but this was a long process and Ireland is currently very concerned about the possibility of new economic borders with the UK – and not just between the two parts of Ireland.

If the rest of the UK were to negotiate some kind of access to the single market, however, matters could be easier. It is difficult at this stage to know exactly what the new government’s attitude will be and the Leave side spoke with two voices about the need to retain the single market, sometimes talking of ‘access’ to the single market as though this were somehow different from being in it. Other member states have made it clear throughout this whole process that free movement of labour is an essential part of the single market and not up for negotiation. Some kind of free trade agreement is likely, perhaps with some restricted provisions on free movement. The essential point is that, the more free trade the UK negotiates with the EU, the easier it would be for Scotland to keep itself in both the UK and European markets. A Norway-type deal, with full UK membership of the single market, would be the best of all for Scotland’s economic interests.

A recent article in the Economist suggests that this could be a way of keeping the United Kingdom together. In practice, the opposite is likely to be true. The more free access there is to both markets, the less need there is for Scotland to stay in the UK and the easier independence becomes. In fact, this was the whole point of the independence-in-Europe argument adopted by the SNP thirty years ago. The downside of the Norwegian model is well known. Norway has to accept most EU policies but has no vote in making them. By accepting economic union and rejecting political union, Norway has marginalized itself, while finding a political compromise that both pro- and anti-EU supporters have come to live with. England and Wales might end up in the same place but Scotland, unlike Norway, has expressed a preference for EU membership. If the UK were to get a Norway-style deal, Scotland would have a strong motive to go for independence, which would give it a seat in the EU councils. Indeed, the ironic outcome of this scenario is that both the remaining UK and Scotland would be subject to European rules but only Scotland would have a say in making them.

Again, none of this is straightforward. Many of the problems raised about independence in 2014 would remain, notably that of the currency. The SNP’s plan in 2014 to use the Pound Sterling was widely criticized. All the unionist parties ruled out a full currency union and shared management of the Pound. Even what seemed to be the SNP’s Plan B, to use the Pound unilaterally, was criticized for allowing the UK to set monetary policy in Scotland, especially if it were to require a formal fiscal pact or informal compliance with fiscal policies set in London. With Scotland in the EU and the rest of the UK outside, these problems would be multiplied. The pledge by the EU to recognize that it is a multi-currency union and to look after the interest of states outside the Euro will lapse along with the rest of the package of reforms that David Cameron negotiated before the referendum. In any case, such a provision would be redundant as, with the UK out, all member states would be in the Euro zone, obliged to join it or (in the case of Denmark) with a currency pledged to the Euro. Without the UK, the rest of the EU could (if the Euro survives) move to tighter regulatory, banking and fiscal union. They could scarcely be expected to bend to the interests of a small state that insisted on using a non-European currency. The most likely outcome would therefore be a Scottish currency, perhaps with an obligation at some point to join the Euro.

The other great weakness of the Yes campaign in 2014 was about the public finances, and that was when the oil price was a lot higher than it is now. Many voters were worried about this, or at least the uncertainty about the future of public services. It might be that, this time, the turbulence in the post-Brexit UK economy will counteract this factor. Scotland’s relatively generous provision for public expenditure lasted as long as Scotland’s oil paid for it, and it was always likely to be under a lot of pressure from MPs and voters in the south. This does not alter the fact that a convincing story would be needed to convince Scots that, after independence, the necessary reforms can be put in place to increase growth and revenues.

The final problem concerns the sequence of events. We still have little idea of what the alternative to EU membership is and how fast events will move. Decisions taken at one time can close off options for the future or open them up. A premature and losing independence referendum would destroy Scotland’s bargaining position. A failure to agree a way forward could divide the nation, just as the UK has been divided by Brexit. Polls before the European referendum suggested that the prospect of Scotland being taken out of the EU against its will increased support for independence only marginally. Polls taken in the immediate aftermath of the vote are a poor guide to long-term attitudes. Scots have not obsessed with Europe as have people in some parts of England, nor has the migration debate been as strident, but nor have Scots been outstanding Europhiles.

It may be not so much the European issue itself that influences the public but the shape of the post-Brexit government and its lack of appeal in Scotland. Europe may just add to the list of issues on which the political agenda is being shaped differently in Scotland from England and Wales and another sign of the rebuilding of the nation as the main political point of reference for its people. With the Labour Party in meltdown, Britain has lost one of the key pillars of union and we might wonder what the basis of a future No to independence campaign may be. Roy Foster’s new book Vivid Faces captures the spirit of a new generation in Ireland in the early twentieth century, who rejected both the British link and the timidity of the Irish Home Rule (devolution) politicians. We are too close to the events to know whether such a movement is under way in Scotland. Unlike the Irish case, it will not be violent, but the implications could be profound.

The United Kingdom has been moving towards a new form of statehood, beyond the traditional categories of independence and sovereignty. Brexit represents a sharp reassertion of sovereignty, with the slogan ‘take back control’ in a world in which the old certainties of sovereignty have gone. As the UK is reconfigured in the wake of Brexit, the one thing of which we can be reasonably sure is that it will not represent a return to the union of old.

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